Typical wealth for blacks vs. White millennials
Older millennials born in the 1980s are make a return of wealth, but there is a vast racial richness chasm lurking beneath this advancement.
In 2016, the wealth levels of older millennials were 34% lower than older generations at similar ages, according to a 2018 study by the Federal Reserve Bank of St. Louis. Within three years, the first part of a new Saint-Louis Fed Study found, they had reduced this wealth deficit to 11%.
However, the second part of the Fed’s study reveals that these strides are quite different when broken down by race. While white and Hispanic families saw improvement in wealth creation, according to the study, black families experienced the opposite, as they fell further below wealth expectations between 2007 and 2019.
From 2016 to 2019, white families in this older millennial cohort saw wealth levels drop from 40% to 5% below what they should be. This wealth deficit doubles to 10% for Hispanic families, but it’s still less than their 2016 wealth deficit of 15%. The deficit is skyrocketing for black families, who were 52% below wealth expectations in 2019 – a significant increase from 39% three years earlier.
These differences seem equally astounding when expressed as median wealth for the same year. For older white millennial families, that’s $ 88,000 – four times the median wealth of $ 22,000 for Hispanic families and about 17 times the median wealth of $ 5,000 for black families.
The report does not take into account the effects of the coronavirus
because full data for this period is not yet available.
Black millennials bear a greater burden of student debt
Despite these differences in wealth, the St. Louis Fed found that all three groups had income levels in line with expectations, indicating that income did not prevent wealth accumulation.
The report suggests that one of the reasons older black millennials are falling increasingly below wealth expectations is because of their massive student loan debt.
Black Students Bear Heavier Debt Burden Than White Peers: About 87% of black students attending four-year colleges take out student loans against about 60% of white students. They also owe $ 7,400 more on average than their white peers after graduation, according to the Brookings Institute.
Black borrowers under 40 were also more likely to be late on payments in 2019 than white or Hispanic borrowers, according to the Federal Reserve. Black graduates are almost five times more likely to default on their loans than their white peers.
The racial wealth gap is why some politicians and lawmakers advocate for the cancellation of student debt. Several experts previously told Insider that communities of color would be one of the groups that will benefit the most from student debt cancellation plans.
Right now, it looks like this socio-economic divide is not about to narrow anytime soon. As the authors of the St. Louis Fed report, Ana Hernández Kent and Lowell Ricketts, wrote: “Given the large wealth gap and negative trend, disparities among older black millennials may persist. as these families age, preventing their full participation in the economy.